Israel Diamond Exchange (IDE) President Yoram Dvash says a news report last week that Standard Chartered Plc is demanding more loan protection from diamond business clients and will tighten loan standards has further confirmed the difficulty in securing financing firmly for the diamond trade.
The London-based bank has exposure of around $2 billion to the diamond industry and is asking diamond manufacturing clients to secure payment insurance or provide 100% collateral, according to a Bloomberg Business report.
"We see that the situation is not getting easier for diamond companies, which means we have to work twice as hard to try and find solutions," said Yoram Dvash.
"I understand that Standard Chartered's $2 billion in loans to the diamond sector is less than 1% of the bank's total business, but it is still moving to provide itself with extra security against possible problems in the future. That shows the tough situation that diamond industry members are facing.
"I hold regular meetings with officials from banks in Israel. I explain that the Israeli diamond sector is very cautious and prudent in the way it does business. We don't take unnecessary chances and we have a global approach to business which diversifies risk and increases trading opportunities.
"Financing has been a leading issue for the World Federation of Diamond Bourses (WFDB) in recent years and will be at the top of the agenda at the World Diamond Congress in Dubai in May.
"I will be comparing notes with my colleagues from the WFDB at the World Diamond Congress, as well as holding many meetings with the various stakeholders who will be attending the Congress, especially banking officials. My aim is to persuade them that backing the diamond industry makes good business sense.
"We must secure more credit lines in order to expand the business. Let us remember that the diamond trade is not just a business that employs tens of thousands of people in Ramat Gan, Antwerp, New York and Hong Kong, among other places, but also millions of people dependent on the livelihood of miners in Africa and cutters and polishers in India, China and elsewhere in Asia," Dvash added.
